01/10/01

TRIPS and its impact on developing countries

Of all the agreements administered by the World Trade Organisation (WTO), the
Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) is
undoubtedly the most controversial with respect to its development-related
impacts. The agreement requires all WTO member states to establish minimum
standards of legal protection and enforcement for a number of different forms of
intellectual property rights (IPRs).

Many developing countries hold that the TRIPS agreement — which came into
force in 1995 — is unbalanced in that it favours developed countries and
transnational corporations, and at the same time is unhelpful or even harmful to
their own interests. In addition, concerns have been raised about the moves to
ensure that developing countries accept higher standards of intellectual
property protection than the WTO requires, even before they have determined how
best to implement the TRIPS agreement in ways that support economic development
and poverty alleviation.

Non-governmental organisations have criticised TRIPS on the grounds that it
imposes various costs on developing countries — such as more expensive drugs,
agricultural inputs and foreign-owned technologies — without producing
sufficient longer-term gains in areas like trade and investment. Developed
countries tend to counter that strong IPR protection will attract investment to
developing countries and stimulate local innovation and creativity. In this way,
they say, the poorer countries have nothing to fear from TRIPS.

The standards of protection and enforcement required of WTO member states are
very high, in that they are essentially those that developed countries
themselves have only recently reached. In that sense, TRIPS marks a coming
together of three trends in international IPR law whose beginnings date back to
the end of the nineteenth century but that have become especially apparent in
the last two decades.

The first trend embodied in TRIPS has been the widening of the scope of
subject matter that can be protected, and the reduction or elimination of
'exceptions'. Common examples of the latter, some of which are required by
TRIPS, include the extension of copyright protection to computer programs, which
are now treated as literary works, and the application of patent protection to
plants, animals, micro-organisms, DNA sequences, and pharmaceuticals. In many
countries drugs had been excluded from patent protection on the grounds of
public interest.

The second trend is the addition of new types of rights to the global IPR
regime such as plant breeders' rights, and rights to layout-designs of
integrated circuits (which is explicitly required by TRIPS).

The third is the progressive international standardisation of the basic
features of IPRs. For instance, patent regulations increasingly provide
protection for a period of 20 years from the date of application. Until recently
there was wide variation in timescales between countries. Also, patent
applications in almost all countries must now be subjected to literature
searches and examinations to ensure that what they describe is genuinely new,
inventive and industrially applicable. Moreover, patent rights are now almost
universally assigned to the first applicant rather than the first inventor
(except in the United States where it is the opposite).

Intellectual property and development

The precise nature of the link between IPRs and economic development is
unclear. The main issue is not whether or not IPRs can further economic
development. In fact most governments agree that they can and do. History
suggests that well-functioning IPR systems have contributed — some argue
significantly — to the industrial revolutions that took place in nineteenth
century Europe, North America and Japan, and continue to do so today, as
indicated for example by the rapid growth of the modern pharmaceutical industry.

More controversial is the extent to which IPR systems should be allowed — as
they were prior to TRIPS — to vary according to the levels of development and
technological self-sufficiency that individual developing countries have
reached. The issue here is whether a relatively stringent IPR regime (as
embodied by TRIPS) will best encourage economic growth in all countries, or
whether a more flexible one may be more appropriate for some of them.

Developed countries and business associations, whose members benefit directly
from effective IPR regimes, tend to adopt the first position. They argue that
strong IPR legislation will enable developing countries to attract more
investment — since foreign companies will be reluctant to invest in a country
where their technology might be copied with little recompense — and will thereby
gain improved access to new technologies introduced from outside. Developing
countries would also be encouraged to generate more innovations of their own,
because of the rewards to inventors and innovators offered by the IPR system.

But many developing country governments are concerned that the legal
standards required by TRIPS, especially for patents, may simply be too high for
their countries at the present time. For example, they worry that having to
extend IPR protection to advanced industrial fields such as biotechnology and
information and communications technology will only benefit foreign businesses,
since their domestic firms lack the capacity to innovate in this field. Being
unable to freely copy such inventions, they feel, may hinder local firms'
efforts to enhance their own technological capacity and become more innovative
in the future.

Doubts cast on IPR regime

In 2001, the UK government established a Commission on Intellectual Property
Rights to look at how IPRs might work better for poor people and developing
countries. The Commission's report "Integrating intellectual property rights and
development policy" was published in September 2002, and covers the following
areas: intellectual property and development; health; agriculture and genetic
resources; traditional knowledge, access and benefit sharing and geographical
indications; copyright, software and the Internet; and patent reform. The
document contains some quite far-reaching recommendations directed at the global
IPR system including the institutions within it (such as the WTO and the World
Intellectual Property Organisation), and national IPR policy-making.

Overall, the Commission expresses serious doubts that the international IPR
regime in its present form, and current processes to further strengthen IPR
protection, are in the interests of the poor. It also considers that the TRIPS
agreement imposes onerous costs on most developing countries. The Commission
presents well-documented historical evidence to support the view that at certain
stages of development, weak levels of IPR protection are more likely to
stimulate economic development and poverty alleviation than strong levels.
Present-day empirical data is, as the Commission reveals, somewhat lacking. But
what there is, points to the same conclusion.

Due to their different scientific and technological capacities and social and
economic structures, an optimal IPR system is bound to vary widely from one
developing country to another. For example, those countries with relatively
advanced scientific and technological capacities like India and China may well
benefit from high levels of IPR protection in some areas, whereas the
least-developed countries almost certainly will not.

Among the specific recommendations relating to particularly controversial
matters are that developing countries should establish workable laws and
procedures to allow them to use compulsory licensing in order to improve access
to urgently needed medicines. As for the patenting of life, the Commission
recommends that developing countries should not provide patent protection for
plants and animals, and should be permitted to develop sui generis systems for
plant varieties that suit their agricultural systems. With respect to
traditional knowledge and genetic resources, the Commission recommends that all
countries should require patent applications to disclose the geographical source
of genetic resources from which the invention is derived.

Calls to review TRIPS

The case against TRIPS is currently being promoted by several public interest
groups including Oxfam, Medécins sans Frontières, and Third World Network, which
have particularly highlighted agricultural and public health issues. As a
result, there is currently strong pressure coming from some of these groups —
together with a number of developing country governments — for TRIPS to be
revised.

In recent years several developing countries have indicated an interest in
lowering some of the agreed standards. For example, some African countries such
as Kenya have proposed to the WTO that both the ability to patent plants and
animals (which is optional at present, although allowed in the United States,
Europe and Japan) and micro-organisms (which is obligatory) be prohibited. In
addition, a number of Latin American countries — including Peru and Bolivia —
have proposed that the WTO establish new IPR regulations aimed at protecting
traditional knowledge to further their specific development priorities.

TRIPS stipulates that reviews of the agreement itself must be carried out
every two years by a body set up within the WTO — known as the Council for TRIPS
— that is open to all member states. Any revisions of the text of TRIPS can take
place either immediately following one of these reviews or, more likely, at the
conclusion of a new round of trade negotiations. So far there have been no
revisions at all.

Nonetheless, given the growing attention being given to the issues that the
agreement raises, future reviews are likely to become even more contentious.

The author is based at the Queen Mary Intellectual Property Research
Institute, University of London.